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Cianchette v. Cianchette

Supreme Court of Maine

June 4, 2019


          Argued: April 10, 2019

          Catherine R. Connors, Esq. (orally), Pierce Atwood LLP, Portland, and Lee H. Bals, Esq., Jennie L. Clegg, Esq., and Katherine M. Krakowka, Esq., Marcus Clegg, Portland, for appellants Eric L. Cianchette, Peggy A. Cianchette, PET, LLC, and Cianchette Family, LLC

          Jennifer A. Archer, Esq. (orally), Timothy H. Norton, Esq., and Emily G. Atkins, Esq., Kelly Remmel & Zimmerman, Portland, for appellees Tucker J. Cianchette and CBF Associates, LLC

          Benjamin P. Gilman, Esq., Maine Chamber of Commerce, for amici curiae of Maine State Chamber of Commerce and Associated General Contractors of Maine, Inc.

          Panel: MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ. [*]

          JABAR, J.

         [¶1] Peggy A. Cianchette, Eric L. Cianchette, PET, LLC, and Cianchette Family, LLC (collectively, Peggy and Eric) appeal from a judgment of the Superior Court (Cumberland County, Warren, J.) denying their motions for judgment as a matter of law and a new trial following a jury verdict in favor of Tucker J. Cianchette on his claims for breach of contract, breach of fiduciary duty, and fraudulent misrepresentation. They argue that the court erred by (1) allowing Tucker to proceed on a claim of fraudulent misrepresentation based upon allegations that, at the time the contract was executed, Peggy and Eric did not intend to perform their obligations under the contract; (2) failing to give a requested jury instruction; and (3) allowing Tucker to proceed on a claim for breach of fiduciary duty when the parties' relationship was governed by a limited-liability-company operating agreement. We affirm the judgment.

         I. BACKGROUND

         A. Facts

         [¶2] The following facts, including all justifiable inferences, are drawn from the trial record as viewed in the light most favorable to the jury's verdict. See Hansen v. Sunday River Skiway Corp., 1999 ME 45, ¶ 5, 726 A.2d 220.

         [¶3] In 2012, the owner of Casco Bay Ford (the dealership)-a Ford vehicle dealership in Yarmouth, Maine-hired Tucker as general manager. A year later, the owner approached Tucker and offered to sell him the dealership and the real estate upon which it sits. Because Tucker lacked the financial resources to complete the purchase on his own, he brought the opportunity to Peggy and Eric Cianchette, his step-mother and father. Although the owner of the dealership was aware of Peggy and Eric's prospective roles in financing the purchase, he made it a condition of the sale that Tucker be a part-owner of the dealership because he "would have never sold the business to someone that [he] didn't know and was not in the car business."

         [¶4] Together, Peggy, Eric, and Tucker formed PET, LLC (PET), to purchase, own, and operate the dealership. Peggy and Tucker are each 33% owners of PET, while Eric owns the remaining 34%. Peggy was named manager of PET and remains in that role to date. Peggy and Eric formed a separate company, Cianchette Family, LLC (Cianchette Family), to own the real estate where the dealership is located.

         [¶5] Because the dealership is a certified Ford Motor Company (Ford) dealership, Eric, Tucker, and Peggy each had to receive certain approvals from Ford. Eric and Tucker were required to personally guarantee a "floor plan" line of credit to finance the dealership's vehicle inventory, which they sought from Ford Motor Credit Company, LLC (Ford Credit). Tucker was approved as "dealer principal" or "F(ii)"-a person with proven capacity in the vehicle dealership business who is approved to be the face of the dealership and communicate with Ford.[1] Additionally, Ford approved a lease agreement between PET and Cianchette Family for $23, 000 per month.

         [¶6] In December 2013, PET and Cianchette Family completed their respective purchases of the dealership and the real estate. Almost immediately following the sale, Peggy informed PET that the rent would be nearly tripled to $65, 000 and would be paid to a third party, Top of Exchange, LLC-a company owned by Eric and a trust established for the benefit of Peggy and Eric's children, excluding Tucker.

         [¶7] The next year, Peggy, Eric, and Tucker began discussions about Tucker purchasing Peggy and Eric's shares of PET, leaving him as the sole owner of the dealership. At Eric's urging, Tucker obtained a loan commitment letter from Androscoggin Savings Bank (Androscoggin). When Tucker presented the commitment letter to Eric, however, Peggy and Eric rescinded the offer to sell their shares. After Tucker pushed Peggy and Eric for a reason why they had had him seek a commitment letter for no reason, he was told "I guess we just wanted to see you fail."

         [¶8] In 2015, Peggy directed Michael Cianchette-her son and Cianchette Family's attorney-to move $600, 000 out of PET's operating account with Ford Credit and into a new account at Merrill Lynch that was opened by forging Tucker's signature. Because the Merrill Lynch account earned significantly less interest, and because Tucker's compensation was based on all income earned by PET, including interest, his compensation as general manager was reduced. Additionally, Peggy, without any vote by PET's shareholders, made a $375, 000 interest-free loan from PET to Cianchette Family for use on a real estate project in Florida. Tucker had no interest in or knowledge of the real estate project. As of the trial date, the loan had not been repaid.

         [¶9] That same year, Peggy and Michael approached Tucker at the dealership and presented him with a check for some of his share of PET's profits and an amendment to PET's operating agreement that they wanted him to agree to. The amendment would have converted Tucker's shares in PET into a new lower class of stock that would have allowed Peggy and Eric to take all profits. The amendment also included a waiver of claims for any and all violations of PET's operating agreement that may have occurred up to that point. Tucker refused to sign the amendment.

         [¶10] In September 2015, Peggy, Eric, and Tucker again began discussing a sale of Peggy and Eric's interests in PET to Tucker. When Tucker agreed, Peggy and Eric presented him with a purchase and sale agreement that had been drafted by Michael. However, as a condition of the agreement, Tucker was required to first sign the amendment to PET's operating agreement that he had previously refused to sign. Once again, Tucker refused to the sign the amendment and, by extension, the purchase and sale agreement.

         [¶11] Two months later, Peggy and Eric presented Tucker with two separate purchase and sale agreements, one for their ownership interests in PET and one for the real estate, each agreement contingent on the successful closing of the other. Peggy and Eric required him to pay a $150, 000 nonrefundable deposit to enter into the agreements. Eric later explained that he required the deposit because he wanted it to make it "hurt" if Tucker failed to close the deal.

         [¶12] Tucker paid the deposit and signed the agreements with Peggy and Eric. The following provisions were included within the membership agreement and are pertinent to this appeal:

2.5 Closing Date and Place.
The consummation of the transactions referred to in this Agreement (the "Closing") shall take place on January 31, 2016 (the "Closing Date")Notwithstanding the foregoing . . . Buyer shall have the right to extend the Closing Date for not more than thirty (30) days ... provided the purchase price shall increase by $1, 000 for each calendar day the Closing does not occur after January 31, 2016.
4.5 Proof of Ability to Close.
On or before November 30, 2015, Buyer shall provide Sellers with a pro-forma closing statement showing expected sources of funds sufficient to complete the transactions described herein.... If Sellers, in their sole discretion, are not satisfied that the Buyer has sufficient funding to close on this transaction, the Sellers may terminate this contract without penalty by providing Buyer with written notice of termination on or before December 15, 2015 ....
6.2 Seller's obligations under this Agreement are contingent upon buyer having obtained from Ford Credit the release of any personal guarantees or other performance guarantees given by either of Sellers in regard to Casco Bay Ford's floor plan financing facilities and any other personal guarantees which either Seller has given in regard to PET or Casco Bay Ford to any person, including, but not limited to vendors, Ford Motor Company, governmental entities, and other credit providers....

         [¶13] To finance his purchase, Tucker secured a loan commitment from Androscoggin and expected the approval of a loan guarantee from the Small Business Association. Tucker also received the approval of Ford to move forward with his purchase and the approval of Ford Credit to secure a "floor plan" in his name alone. Tucker provided documentation of these approvals to Peggy and Eric. To his surprise, Peggy accused him of being dishonest in his disclosures and threatened to terminate the agreements unless Tucker signed a new contingency agreement that required him to provide new disclosures and that extended Peggy and Eric's termination right to ...

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